“Can do, must do” on expanded Sault port

A consultant is recommending that Sault Ste. Marie proceed with developing a $121-million “regional
harbour” complex to serve both Essar Steel and to accommodate more
shippers.

With marine traffic into Essar expected
to increase in the coming years, KPMG is recommending that the City
of Sault Ste. Marie get moving on securing government infrastructure
funding to have the project shovel-ready within two to three years.

That's music to ears of the city's
transportation and infrastructure committee in its endorsement of the
report which will go before city council, Feb. 4.

The creation of an expanded harbour
with Seaway draft on Essar's extensive brownfield property has been
identified by the city as a high priority item.

“The expanded regional harbour is
both 'can do' and 'must do,'” said a report submitted to city
council by the committee's chairman Don Mitchell.

The committee wants council to move
immediately from the study stage to the implementation phase by
starting “advanced discussions” with Essar, talking with
potential port users and notifying key government departments and
area First Nations.

Oscar Poloni of KPMG in Sudbury, who
prepared the report after a year of study, would not agree to an
interview with Northern Ontario Business.

A regional harbour complex would
involve new docks, material handling equipment upgrades, road and
rail improvements, and blasting and dredging of a notorious shoal
area in the upper St. Mary's River to widen an approach channel into
Essar Steel.

Sault Ste. Marie has port facilities
but it is privately owned by Essar.

Those docks handle about 5.5 million
tonnes of cargo annually, most of it inbound raw material used in
steelmaking. Tenaris Algoma Tubes, a global manufacturer of seamless
tubes for the oil and gas industry, also has access to the
facilities.

KPMG reports there is a high
probability that cargo volumes will increase by 30 per cent in the
“near future” to up to 7.2 million tonnes.

With an eye on boosting steel
production, Essar expects marine traffic will increase 29 per cent,
while Tenaris expects to increase its volume by 22 per cent.

In the next couple of years, Essar will
be shifting its iron ore supply from mines in northern Michigan to
the company's own mine and steel mill now being built on the Mesabi
Range in northern Minnesota. Iron ore will be shipped across Lake
Superior through Duluth, Minn to the Sault steel works.

An improved port would allow Tenaris to
handle more tube rounds, increase production and possibly set up
Sault Ste. Marie as a distribution point for moving product to
customers in Western Canada and the U.S.

But the report said Essar's two dock
facilities are in poor shape, plagued by either inadequate
infrastructure or shallow draft.

The Sault has dabbled with various port
plans for decades, including in the late 2000s, when a team of
consultants, including KPMG, scoped out the city's entire
transportation scene as part of the 2007 multi-modal study.

At that time, the conclusion drawn was
that the Sault had limited marine potential since geography placed it
“too far from the action” to attract cargo to support a larger
port.

This time, KPMG claims there is more
business to be had.

The movement of slag material, a
steelmaking byproduct, could increase by 13 per cent, and there is
entirely new potential to ship out aggregate, and receive and store
road salt.

KPMG said the longer term prospects for
more freight through the Sault could be as high as 200 per cent.

The operational and management scenario
being floated by KPMG is for two ports.

One would operate for Essar's exclusive
use with another managed by a not-for-profit as a public port.

The report recommends creating a
public-private framework to finance, build and operate a harbour
complex.

Essar senior management has reviewed
the report and is supporting it. Both federal MP Bryan Hayes and
provincial MPP David Orazietti are on board.

The Building Canada Fund is identified
in the report is a possible funding source.

But KPMG recommends moving fast on the
project.

“Although there appears to be good
preliminary support at senior levels,” said the committee report,
“government funding programs are not a sure thing – applications
will be reviewed on a merit-based system and there is good
competition for limited government money.”